OFCCP Deputy Director Les Jin

Subcommittee on Economic OpportunityCommittee on Veterans’ AffairsU.S. House of Representatives

September 29, 2010

Chairwoman Herseth Sandlin, Ranking Member Boozman, and members of the Subcommittee:

Thank you for giving me the opportunity to testify about the Office of Federal Contract Compliance Programs (OFCCP) and the critical work we do to enforce the Vietnam Era Veterans’ Readjustment Assistance Act of1974 (VEVRAA), as amended, which prohibits federal contractors and subcontractors from discriminating against specified categories of veterans, including disabled veterans, and which requires that federal contractors take affirmative action to employ and advance in employment such veterans. Your invitation requested that OFCCP also discuss our work with respect to Section 503 of the Rehabilitation Act of 1973 (Section 503) as it pertains to veterans. As members of the Subcommittee know, Section 503 prohibits discrimination against individuals with disabilities and requires that federal contractors take affirmative action in the employment of such individuals. Section 503 does not, however, pertain specifically to veterans. Rather it protects all individuals with disabilities as defined under the Act, which may or may not include disabled veterans, as defined under VEVRAA. Nevertheless, it is another law that may afford protection to veterans with disabilities.

I am honored to speak with you today on behalf of OFCCP Director Patricia A. Shiu, who was appointed by President Obama to lead this agency and ensure that OFCCP fulfills its mandate to enforce the civil rights of those who are employed by or seek employment with federal contractors and subcontractors. Given that our purview extends to more than 200,000 establishments with contracts amounting to approximately $700 billion in taxpayer money, OFCCP’s enforcement, outreach and compliance activities have a ripple affect across the entirety of the American work force.

Yesterday was Director Shiu’s one year anniversary at the helm of OFCCP and since she cannot be here today, I’d like to update you on the progress we have made since we last appeared before this Subcommittee in May 2009. I will also address the specific questions raised by the Chairwoman in her invitation to testify.

Last Friday, we marked the 45th anniversary of Executive Order 11246, which charged the Secretary of Labor with ensuring equal employment opportunity by federal contractors and subcontractors. The Executive Order also led to the creation of OFCCP. Under the leadership of Secretary Solis and Director Shiu, we have worked to re-build OFCCP and re-focus our efforts on three priorities:

strengthening enforcement;

implementing a robust regulatory agenda; and

identifying more individual complaints through greater outreach.

Let me speak about these three priorities.

Priority #1: Strengthening Enforcement
OFCCP is an enforcement agency mandated to protect the civil rights of those who work or seek to work for federal contractors and subcontractors. Last year, OFCCP investigated a total of 3,917 establishments. While the final numbers for FY 2010 are not yet available, we have scheduled 3,975 cases for evaluation to date. Of those, we have performed desk audits on 1,142 cases and conducted 683 on-site visits. We have also completed more than 450 evaluations of contractors who received federal funds through the American Recovery and Reinvestment Act of 2009.

Over the past year Director Shiu has shifted our enforcement activities to hold contractors accountable for their employment practices. For example, Director Shiu has worked with our Regional Directors to institute a new protocol that requires OFCCP compliance officers to go on-site and verify how contractors are treating protected veterans and people with disabilities, rather than simply accepting contractors’ self-reporting. In FY 2010 roughly 30% of all on-site reviews conducted by OFCCP found recruitment violations pertaining to protected veterans. More on-site reviews are necessary to improve our verification efforts and increase contractor accountability.

The need for strong enforcement is evident; however, it requires the OFCCP staff to effectively investigate and resolve cases in a timely manner. Under the previous administration, OFCCP saw its staff reduced by 28%. Thanks to President Obama and this Congress, our budget has increased by 25% and much of that funding has been used to expand our enforcement staff. In the past sixteen months, OFCCP has grown by almost 35%, from 585 to 788 employees working in our headquarters, six regional offices and 45 district and area offices nationwide. Almost all of that growth has come from the hiring of nearly 200 new compliance officers who will increase our ability to evaluate, investigate and resolve cases. I am proud to report that almost 25% of our employees are veterans, demonstrating that at OFCCP we practice what we preach.

In addition to growing our team, Director Shiu made a commitment at the start of her tenure to provide high quality, uniform and nationally-run training for every new compliance officer in the agency. OFCCP has not provided such standardized training in more than a decade. I can report that we are on track to meet the Director’s training goal by the end of 2010.

Finally, we have become more aggressive in the way we resolve cases. While we seek voluntary compliance, OFCCP is making it clear that we will hold violators accountable to the full extent of the law. In FY 2010 we referred more than 34 cases to the Solicitor of Labor for litigation, more than doubling the amount referred in FY 2009 and tripling the number from FY 2008. We are also making it clear to the contractor community that, in the cases of the worst offenders, we will impose contract-related sanctions against contractors or subcontractors for failure to comply with the laws enforced by OFCCP and their implementing regulations.

Priority #2: Implementing the Regulatory Agenda
We have begun an ambitious process of making major regulatory revisions to our enforcement program that will allow OFCCP, among other things, to help veterans get good jobs. I would like to discuss two specific items from our regulatory agenda that pertain to VEVRAA and Section 503.

VEVRAA
We are currently in the process of revising our implementing regulations to strengthen VEVRAA. According to the Bureau of Labor Statistics (BLS), as of last month 11.9 million veterans are in the civilian labor force – a drop of more than 153,000 from one year ago. VEVRAA protects specified categories of veterans that are employed or seeking employment with covered federal contractors and subcontractors.

VEVRAA requires federal contractors to take special steps to recruit, hire, train and promote qualified, protected veterans. Taken as a whole, under VEVRAA and its amendments, protected veterans include: special disabled veterans, veterans of the Vietnam era, veterans who served on active duty or in a campaign or expedition for which a campaign badge has been authorized, recently separated veterans, Armed Forces Service Medal veterans, and all veterans with service-connected disabilities.1

VEVRAA further requires contractors to list most job openings with an appropriate employment service delivery system and each such employment service delivery system is to provide protected veterans who are qualified with priority referrals to those job openings. To be clear, VEVRAA does not require federal contractors to give veterans a special preference in hiring. Protected veterans are entitled to receive priority in referrals to the job openings that federal contractors are required to list with the appropriate employment service delivery system.

In our conversations with veterans across the country, we have become alarmed at the underreporting of special status by disabled veterans. Many of these young men and women are returning from battle with physical injuries, emotional trauma and a host of other challenges. They need re-entry services and some have told us they are afraid to disclose their status as a disabled veteran – and sometimes even their service – to their employers for fear of being discriminated against when hiring, compensation and promotion decisions are made.

In response to those concerns, OFCCP announced a proposal to revise our VEVRAA regulations in the Department of Labor’s Spring 2010 Regulatory Agenda. The Notice of Proposed Rulemaking, which is scheduled to be published next winter, would require federal contractors and subcontractors to strengthen affirmative action programs and measure the effectiveness of their equal employment opportunity efforts.

Section 503
In addition, last week, we closed a 60-day period of public comment during which we asked for proposals and comments on how we could strengthen our regulations implementing Section 503 of the Rehabilitation Act of 1973 in order to help people with disabilities obtain good jobs. As mentioned earlier, Section 503 requires equal employment opportunity for people with disabilities, which may include veterans but is not specifically geared towards them. In spite of the fact that this law has been on the books for 37 years, the percentage of people with disabilities who are unemployed or not in the labor force remains significantly higher than those without disabilities. According to recent data from DOL’s Bureau of Labor Statistics (BLS), 22% of people with disabilities were in the labor force in August 2010, compared with 70.2% of people with no disability. Further complicating these statistics is the fact that we do not currently have the ability to disaggregate data to specifically identify cases involving disabled veterans. We know that many of the veterans we serve are disabled, but their disabilities need to be accounted for separately from the disability community at-large.

In our Advanced Notice of Proposed Rulemaking (ANPRM), OFCCP asked for public input on 18 key questions. We are looking at employment practices that are effective in recruiting, hiring, advancing and retaining qualified individuals with disabilities; available data that could be used to establish hiring goals and conduct utilization analyses of individuals with disabilities; and ways to strengthen linkage agreements between federal contractors and organizations that focus on the employment of qualified individuals with disabilities. In the next month, we will use the input we received from the ANPRM to craft proposed regulatory changes to Section 503 that better address disparities that people with disabilities – including some veterans with disabilities – face in the workplace.

Priority #3: Identifying Individual Complaints through Outreach
In recent years, OFCCP has not prioritized individual complaints. Instead, the agency focused on systemic discrimination across businesses and whole industries. In fact, the previous administration further narrowed OFCCP’s activities by focusing primarily on systemic discrimination in blue collar jobs. But cases involving protected veterans and persons with disabilities rarely raise systemic issues. Under Director Shiu’s leadership, cases involving veterans and persons with disabilities have been prioritized, but there still remain some obstacles to enforcement.

OFCCP’s primary enforcement mechanism involves a scheduling process that selects federal contactors and subcontractors to be evaluated for compliance. This scheduling process must be neutral unless OFCCP has probable cause to believe a contractor is in violation the law. We cannot target specific companies for on-site investigations absent our neutral plan or probable cause, for example through a complaint, because of constitutional protections afforded by the Fourth Amendment.

Only if an individual files a discrimination complaint against a federal contractor, are we empowered to begin an investigation. Over the last five fiscal years, OFCCP conducted a total of 360 investigations resulting from complaints filed by veterans. Sixteen of these investigations identified violations and were ultimately closed with financial settlements. This is more than double the rate of violations of discrimination generally found through our neutral scheduling process.

Increasing the number of individual complaints we receive and investigate will increase our ability to protect veterans. Therefore, we have commenced a new effort to broaden our outreach efforts to the communities of workers we protect.

For too long, OFCCP’s idea of “stakeholder outreach” revolved primarily around compliance assistance: educating and supporting the very contractors we are charged with regulating. We believe in being proactive and reaching out to industry liaison groups who are making good faith efforts to comply with the law. We think reaching out to the good players and encouraging them to model best practices to their cohorts can help us fend off a lot of bad behavior on the front end. However, that cannot and will not be the sum total of our outreach efforts.

That is why Director Shiu has created a new team at OFCCP dedicated to focusing on community-based engagement as part of our communication and outreach strategies. We are working to develop partnerships with the civil rights, workers’ rights, advocacy and service-providing organizations who serve our protected veterans on a daily basis. Using new technologies, we are educating veterans about their rights in the job market. We are showing them how to identify discriminatory practices, and we are creating avenues for two-way communication between communities of veterans and OFCCP.

Social media networks, informative and accessible web platforms and online training software are important tools we are and will continue utilizing to reach our audiences. However, nothing is as powerful as direct community outreach which connects us to the people we are mandated to serve. That is why so much of Director Shiu’s time is spent traveling around the country and speaking at community forums and town hall meetings to hear from our veterans and to educate them about OFCCP.

So far in FY 2010, OFCCP has hosted 139 outreach events where VEVRAA and Section 503 were the primary topics of discussion. That is almost double what we did in FY 2009. Moreover, nearly every outreach event OFCCP has conducted included specific sessions regarding veterans. Director Shiu personally hosted three national, Web-based listening sessions as well as three town hall meetings in California, Illinois and Louisiana.

Our outreach also extends to our colleagues across the federal government. In May of this year, as a result of a partnership with the Federal Acquisition Institute and the Defense Acquisition University, OFCCP hosted two training sessions at the General Services Administration Expo Conference in Orlando, Florida. At the conference, OFCCP provided valuable information on the responsibilities of government acquisition officers under our regulations, including their responsibility to ensure that all qualifying government contracts contain the required equal opportunity clause that requires affirmative action for, and prohibits discrimination against protected veterans. Engaging acquisition officers from federal agencies in the pre-award process will be a key element of our outreach strategy going forward.

Finally, as our new outreach model is clarified and scaled, it is our hope that we will be able to draw upon the talents and resources of our entire OFCCP team. I mentioned earlier that almost a quarter of our employees are veterans. That’s 193 men and women who come from a community we are honored to serve. Veterans who work at OFCCP are the ideal liaisons to engage with their fellow servicemen and women, to explain the protections we have to offer and the investigatory and legal resources we can provide. Director Shiu and I are most excited about this “Ambassador” program because we know from our own experiences that nothing will motivate our staff more than the ability to make a tangible difference in service of the communities to which they belong.

Next, let me address the specific questions raised by the Chairwoman in her letter of invitation for this hearing.

First, the Chairwoman asked how the DOL monitors contractor compliance.

As I mentioned earlier, there are two primary procedures OFCCP utilizes to monitor whether federal contractors and subcontractors are complying with the law: (1) scheduled compliance evaluations of federal contractors and (2) investigations of individual or class complaints which are filed by veterans who allege discrimination.

However, we are not alone in our monitoring efforts. OFCCP is one of three agencies within the Department of Labor (DOL) with responsibilities for administering the equal employment opportunity provisions of VEVRAA. The other agencies are the Employment and Training Administration (ETA) and the Veterans’ Employment and Training Service (VETS).

OFCCP is responsible for ensuring compliance with VEVRAA’s requirement in Section 4212 (a)(1) that contractors take affirmative action to employ and advance in employment qualified protected veterans, and the requirement in Section 4212(a)(2)(A) that contractors list their employment openings with the appropriate employment service delivery system.

Offering technical assistance to federal contractors and subcontractors to help them understand the regulatory requirements and review process;

Securing relief for victims of discrimination that includes, but is not limited to, back pay for lost wages;

Negotiating conciliation agreements with contractors and subcontractors who are in violation of regulatory requirements;

Monitoring contractors and subcontractors’ progress to ensure that they are fulfilling the terms of their conciliation agreements by reviewing periodic compliance reports;

Forming linkage agreements between contractors and job training programs to help employers identify and recruit covered veterans; and

Recommending enforcement actions to the Solicitor of Labor.

ETA oversees priority referrals for veterans seeking employment, and is responsible for ensuring that the appropriate employment service delivery systems comply with the requirement in Section 4212(a)(2)(B) that covered veterans receive priority in referral to federal contractor employment openings. ETA also provides leadership and oversight over the employment service offices of State workforce agencies.

VETS administers the requirement in Section 4212(d) that federal contractors report annually on the number of covered veterans who are employees and new hires in their workforces through the VETS-100 and VETS-100A reports. VETS also administers the Local Veterans’ Employment Representative (LVER) program to assist local employment service offices and One-Stop Career Centers in providing priority job referrals to veterans (38 U.S.C. 4104). Finally, VETS investigates complaints under the Uniformed Services Employment and Reemployment Rights Act, which also protects veterans from employment discrimination.

Next, let me discuss the VETS-100 report.

The VETS-100 report is filed by contractors who entered into covered contracts prior to December 1, 2003. The VETS-100A report is filed by contractors who entered into covered contracts on or after that date. Those with covered contracts entered into both before and after December 1, 2003, file both reports. The reports differ in terms of the contract coverage threshold for filing the report as well as the categories of protected veterans included in each.

Under the leadership of Assistant Secretary Raymond Jefferson, VETS has encouraged and promoted efforts to increase reporting, particularly through electronic submissions. In doing so, VETS is streamlining reporting by firms and enhancing the agency’s data validation. Electronic filings have increased dramatically over the past five years. In the 2009 reporting period 94 percent of the VETS-100 and 95 percent of the VETS-100A reports were submitted electronically.

The Chairwoman asked if the VETS-100 report is sufficient to provide insight into contractor compliance.

Yes, we believe these reports can be used by our compliance officers in the evaluation process as high level indicators of the number of protected veterans hired by a company compared to the total number of new hires as well as to the proportion of protected veterans in the company’s workforce. However, we do not believe OFCCP should use the VETS-100/100A reports exclusively to verify compliance with equal employment opportunity regulations for disabled and other protected veterans.

Next, the Chairwoman asked if federal contractors are meeting their obligation to list employment opportunities in the Federal Contractor Job Listing program.

OFCCP’s investigative procedures during an on-site investigation include verification that the employer is listing appropriate job openings with the employment service delivery system so that veterans may be given priority in referral, as stated in 41 C.F.R. 60-250.5(a)(2) and 60-300.5(a)(2).

In FY 2009, 174 contractors were cited for recruitment violations impacting veterans, including failure to comply with mandatory obligations to post job listings, conduct outreach and fulfill other requirements for veterans. OFCCP negotiated conciliation agreements in all these cases to correct the violations.

This is an area where we are working closely with our colleagues at ETA to improve communication so that when OFCCP finds a violation, ETA can move quickly to ensure that appropriate employment service delivery systems, including employment service offices of State workforce agencies, get the data they need to make these job postings available.

The Chairwoman also asked what actions DOL has taken against non-compliant contractors.

Where voluntary compliance cannot be achieved, OFCCP may continue conciliation efforts with the contractor or refer the matter to the Solicitor of Labor to institute formal, administrative enforcement proceedings. If there is a finding of discrimination against a protected veteran, the contractor is required to provide back-pay and other make-whole remedies.

In FY 2009, OFCCP negotiated a total of 694 Conciliation Agreements with contractors who were found to be in violation of equal employment opportunity requirements under one or more of the three laws enforced by OFCCP. As of the 3rd Quarter of FY 2010, we had negotiated 559 such agreements. Perhaps of greatest interest to this Subcommittee is that 43% of the Conciliation Agreements negotiated in FY 2009 and 37% of the ones from this year included linkage agreements to correct violations of requirements for recruitment of veterans and persons with disabilities. Contractors have committed in these linkage agreements to partner with specified local job training programs, veterans’ organizations and other community groups in order to better identify and recruit covered veterans and people with disabilities.

In the past two fiscal years, more than 50 OFCCP cases were referred to the Solicitor of Labor for enforcement. None of these cases involved veterans. We recognize this is a problem and it’s one of the primary reasons why we are increasing our enforcement and outreach efforts with regard to veterans. Also, as I said earlier, in the most extreme cases, OFCCP will impose contract-related sanctions against contractors or subcontractors for failure to comply with the laws enforced by OFCCP and their implementing regulations.

Further, Madame Chair, you asked if we have received any complaints from veterans on this issue.

In FY 2009, OFCCP received a total of 488 complaints from individuals. Of those, 64 were filed under VEVRAA provisions and 130 under Section 503. As I stated earlier, the data on Section 503 complaints does not differentiate between disabled veterans and other people with disabilities. So far this year, we have received a total of 562 individual complaints. Of those, 38 were filed under VEVRAA and 99 under Section 503.

The most common complaints we get from veterans involve discrimination in hiring and termination; though, complaints usually indicate more than one issue. This differs from the general pool of complaints we receive in which the top three issues deal with harassment, retaliation and termination.

If a veteran believes a federal contractor or subcontractor has discriminated against him or her or that a federal contractor has otherwise violated VEVRAA, he or she may file a complaint with OFCCP. Complaints may also be filed through a LVER at a local One-Stop Career Center. Complaints filed through VETS or LVERs are promptly referred to OFCCP.

Finally, you asked about the steps OFCCP has taken since we last appeared before this Subcommittee to improve DOL contractor compliance.

In addition to the progress I described earlier on our enforcement, regulatory and outreach efforts, I’d like to point out two important challenges we are actively confronting right now:

The first challenge is to increase the speed with which cases are resolved. Over the past two years, OFCCP investigations were completed, on average, in approximately 700 working days. This includes not only cases involving veterans and people with disabilities, but all groups covered under OFCCP’s protections. Investigatory time includes time spent with the complainant to be sure that the complaint adequately reflects the nature of the acts that led the individual to file, time spent researching jurisdiction to ensure that the company was a covered federal contractor at the time of the alleged discriminatory act, and the time spent conducting the actual investigation of the complaint. Working with our Regional Directors, Director Shiu is developing new goals to shorten the time frame in which we either close a case or refer it for litigation. This initiative will be greatly enhanced by the nearly 200 compliance officers OFCCP hired in the past year.

The second challenge is to increase the transparency of data. When it is appropriate under the Freedom of Information Act (FOIA), OFCCP treats business information received from federal contractors during a compliance evaluation as confidential. It is OFCCP practice not to release data where the contractor is still in business and where the contractor asserts, and a Department of Labor review process determines, that the data are confidential and that disclosure would subject the contractor to competitive harm. The Department’s FOIA regulations at 29 C.F.R. 70.26 require OFCCP to notify affected contractors on a case-by-case basis whenever a FOIA request is made. This notification gives contractors the opportunity to object to the disclosure of any data they consider confidential.

The President and Secretary Solis have been very clear about their desire for increased transparency in government. We believe such transparency could lead to increased compliance and better outcomes for our clients. OFCCP does use its available resources, such as media releases, to communicate OFCCP policies, accomplishments, best practices, awards, and enforcement actions. Information about enforcement actions OFCCP may publicize includes the filing of administrative complaints, the signing of conciliation agreements, the entry of consent decrees, orders of debarment, or other news that may be appropriate for public dissemination as determined by OFCCP’s National Headquarters. However, while we have aggressively utilized the media to communicate our successes, we are currently prohibited from publishing some of the data we use and gather in the course of our investigations. We would be interested in the thoughts of this Subcommittee on the kind of information that we can and should publicize about our cases and the conciliation agreements we reach.

In conclusion let me say that Secretary Solis has laid out a straightforward vision for the Department of Labor: Good Jobs for Everyone. Good jobs give veterans the opportunity to support their families by increasing incomes and narrowing the wage gap. Good jobs exist in safe, healthy, fair and diverse workplaces. Good jobs help veterans and their families get into the middle class. But it takes good government – one that provides our veterans with the training, resources, protections, and transition services – to create a pathway to those jobs.

At DOL, we see ourselves as the Department of Good Jobs for Everyone. Central to this vision is the idea that the reach for good jobs must truly be within the grasp of everyone. OFCCP is on the front lines of defense for those who seek work and those who are at work.

Madame Chairwoman, Mr. Boozman, I would like to extend my appreciation to you and the members of this Subcommittee for inviting me to discuss the work of OFCCP. We know that because our veterans stood up for us over there, we have promises to keep to them over here. Director Shiu often reminds us that taxpayer dollars must never be used to discriminate and being a federal contractor is not a right, but a privilege. With that privilege comes a responsibility to abide by the law and make equal opportunity a reality for everyone.

On behalf of the 788 men and women of OFCCP, I pledge to marshal all our talents and resources to realize the promise made 45 years ago by a President who believed we could level the playing field for all workers. And we will do it proudly, in service of our current President who knows we can.

This concludes my statement, and I would be happy to respond to any questions.

1 The Veterans Employment Opportunities Act of 1998, the Veterans Benefits and Health Care Improvement Act of 2000, and the Jobs for Veterans Act of 2002.